Beginning in 2010, Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) plans to launch a new proprietary product each year on the basis of its own R&D. Considering the pace of its ethical pharmaceutical launches to date - Copaxone for the treatment of multiple sclerosis in 1986 and Azilect for the treatment of Parkinson’s disease almost two decades later - this is a major strategic change for the generic drug maker.
Teva is the world’s largest generic pharmaceutical company, and if it begins launching a new ethical product every year, it will enter a new phase in which it will be able to compete strongly against drug development companies.
One of the many analysts covering Teva is Ronny Gal of Sanford C. Bernstein and Co. Inc. He has a Ph.D. in molecular biology from the Massachusetts Institute of Technology. “Teva has received little credit for its efforts to develop a pipeline of innovative branded drugs. This pipeline includes both products developed in-house and through collaborations with Israeli venture capital-backed companies,” he says.
Two of these collaborations are withGamida-Cell Ltd. and TransPharma Medical Ltd.
The collaboration with Gamida-Cell is for the development of StemEx, a method for the expansion of hematopoietic progenitor cells (HPC) (umbilical cord blood cells) for the treatment of various critical hematological diseases in patients who need stem cell transplant (such as bone marrow transplant). The product has obtained orphan drug status from the US Food and Drug Administration (FDA), and Phase II/III clinical trials have begun. Gal predicts that the clinical trials will be completed in 2009, and if StemEx is approved, it will generate a potential $500 million in revenue, half of which will accrue to Teva.
The collaboration with TransPharma is on the company’s pen-sized ViaDerm transdermal drug delivery system to deliver treatments directly into the bloodstream using proprietary radio frequency micro-channel technology. Teva and TransDerman selected five molecules for development, with Teva providing the financing. The first molecule is a growth hormone, which is due to begin Phase III clinical trials before the end of the year. Gal predicts that final approval of the drug could come by the end of 2009, and that the drug targets a $3 billion market. He says the global sales potential is $500 million, half of which will accrue to Teva under the terms of its agreement with TransPharma.
In other words, Teva could see potential revenue of $500 million from these two brand drugs alone, according to Gal. “These two products have the potential of adding $0.30-0.40 profit per share to Teva by 2011, and boost the share price by $5. Investors will begin referring to this upside from these products next year, as attention starts being paid to 2009.”
Earnings per share of $0.30-0.40 translated into a net profit of $250-330 million.
Teva and Gamida-Cell own their joint venture in equal shares and jointly manage it. Teva has committed to invest $25 million to complete the clinical trials for StemEx and bring the product to market. Given that Gamida-Cell has raised $16 million, its president and CEO, Dr. Yael Margolin, says that the company has enough cash for the next two to three years.
TransPharma CEO Dr. Daphna Heffetz says that transdermal drug delivery is the largest drug delivery means. The ViaDerm method is painless, user-friendly, and required no prior training. She said that the company has a two-track strategy to develop drugs, both in-house and in collaboration with Teva. She added that Teva owns 5% of the company after participating in its third financing round.
Published by Globes [online], Israel business news - www.globes.co.il - on September 4, 2007
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